Predatory lending: is The Credit CARD Act enough?

Purpose - The purpose of this paper is to inform readers about pervasive “predatory lending” practices in the credit card industry and to explore the limitations of the Congressional response to this problem. Design/methodology/approach - National attention has been focused on illegal and unscrupulous behavior in the mortgage industry, but practices common to the credit card industry have been virtually ignored. This issue is explored through a description of themodus operandiof credit card lenders, details of regulator positions on predatory lending, and the recent Congressional response to this trend via The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009. Findings - “Predatory lending” is a fraudulent practice that presents serious financial risks to consumers. Recent attempts to minimize those risks by Congressional statute may be inadequate. This paper identifies some of the limitations of those regulatory provisions to raise awareness of the issue. Research limitations/implications - While the response to predatory lending has been well‐intentioned, lenders are constantly findings new ways to circumvent current law and regulations. As a result, research must continue to properly investigate and address the issue. Practical implications - Exploration of credit card lending practices is relevant in the context of the current economic environment. Further, investigation of the prevalence and impact of “predatory lending,” as well as the recent Congressional response, are necessary to determine if enough is being done to stymie this problem and protect consumers from continued economic marginalization. Originality/value - This paper provides current information relevant to the pervasive issue of predatory credit card lending in the USA.